Top aide accused of interfering in Thorning-Schmidt tax audit

Political bulkheads between ministry and tax service were not as “watertight” as claimed

The income tax investigation that last year nearly thwarted Helle Thorning-SchmidtÂ’s hopes of becoming prime minister is back again. But now it is threatening to bring down a top civil servant.

Peter Loft, right-hand man at the Tax Ministry both before and after the September 15 general election, stands accused of interfering with an investigation into whether Thorning-Schmidt paid enough taxes between 2000 and 2008.

At the time of the investigation, Troels Lund Poulsen (Venstre) was tax minister, and Thorning-Schmidt (Socialdemokraterne), was the opposition leader and number one contender to unseat the centre-right prime minister.

On August 22, 2010, after news of her alleged tax problems broke, Loft told the press he had no knowledge of the details of her audit and indeed no right to know about them.

“There are watertight bulkheads between us and, in this case, the Copenhagen division of [tax authority] Skat. We have to keep a distance from the actual case, and I haven’t looked into the specifics of it,” he said.

However, information obtained by Politiken newspaper last week revealed that Loft in fact had already met two times – on August 10th and 13th – with Erling Andersen, the manager of Skat Copenhagen, precisely to discuss Thorning-Schmidt’s tax audit.

In the weeks that followed, Loft met with Andersen about Thorning-Schmidt’s audit three more times, ultimately sending Skat Copenhagen a paragraph to include in its final ruling, according to Politiken.

Skat ruled that Thorning-Schmidt inadvertently had paid too little in tax, based on an incorrect ‘diplomatic’ deduction she had been claiming for her husband, Stephen Kinnock, while he was working in Switzerland from 2000 until 2008. She was made to pay back taxes for 2006-2008, but not for 2000-2005, as the statute of limitations had run out for those years.

Various commentators have expressed shock that Loft, a trusted and distinguished administrator with the Tax Ministry for more than three decades, under both right- and left-of-centre governments, would be implicated in such a gross breach of conduct. Ole Stavad, a Socialdemokrat tax minister from 1993 to 1994, described Loft as “the most proper and honest civil servant you could imagine”.

Others are now speculating whether Loft interfered in the Thorning-Schmidt audit of his own volition or at the behest of his boss, the then-tax minister Poulsen. Poulsen has refused to comment, claiming confidentiality.

The new tax minister, Thor Möger Pedersen (Socialistisk Folkeparti), has asked Loft and Andersen for written explanations of their involvement in the investigation.

The police are now also involved in looking into how SkatÂ’s confidential ruling on Thorning-SchmidtÂ’s tax payments wound up in the hands of the tabloid B.T. just days before the election.

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